Smaato White Paper USma: United States of Mobile Advertising November 2011

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  • 1. open mobile advertisingThe USmA:The United Statesof Mobile Advertising WHITE PAPERPrepared by Nick LaneChief Analyst, mobileSQUARED

2. Mobile is a conversation that all DDB clients want to have now. And weare happy to share our experience that when Mobile is used effectively itmakes all media work harder. We believe that mobile can be an integralcomponent of a larger campaign as long as it works to connect peoplewith people, not just people with brands.Jeff SwystunChief Communications Officer, DDB Worldwide DDB Worldwide Communications Group Inc., known internationally as DDB, is a part of Omnicom GroupInc. Omnicom is the advertising holding company with the highest revenue in the world, at US$12.69 billion,according to Advertising Ages agency rankings of April 2008.Ive got a vision that these mobile phones could have a greater effect thaneven television advertising. I couldnt quite see my way through it becauseit still seems rather misty to me, but I get the feeling that these could beincredibly powerful as an advertising medium.I must say, mobile was all gobbledegook to me but Im beginning to geta little bit of what mobile means and can do for me as a brand. But whatI would say to [the mobile industry] is that we need to understand moreclearly how this all works, why it works, how you use it, the best methodof use and we need somebody to talk to us in laymans terms.Mike GodwinManaging Director, Mvenpick Ice Creams Mvenpick Ice Creams is part of Nestl, and represents the next wave of brands looking to invest in a mobilestrategy. 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising 3. SummaryThe US is all about numbers, big, big numbers. It has a mobilepopulation exceeding 300 million, and a mobile internet user baseon the verge of surpassing 100 million.With this level of scale, mobile advertising budgets are high especially in relation to Europe with the average mobile advertisingcampaign in the US between $75,000-100,000.At this level, it ensures there is sufficient budget available to releasethe creatives on the campaign and deliver a truly compelling, richadvertising experience.Presently, the US is the second largest mobile advertising market inthe world, behind Japan. In 2010, the US mobile advertising marketwill be worth $797.6 million, rising to $5.04 billion in 2015.Aligned with this increase in mobile advertising spend, will be anincrease in US mobile users engaging with advertisements on theirmobile.Consumer research for mobileSQUARED by Lightspeed Researchreveals that 53% of US mobile users claimed not to have seen anadvert on their mobile. User engagement with mobile advertisingwill inevitably increase.Primarily because 49 million mobile users already claim to haveactively engaged with an advert on their mobile, and if just one-thirdof that 53% start to engage with mobile advertising, that wouldcontribute an additional 50 million mobile users. USA Mobile Advertising Market Size $5.04BN$1.24BN 2011 2015 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising 3 4. The 75,000 dollar questionThe US mobile advertising market is a very exciting market to beoperating in right now. It has scale like no other developed mobilemarket and that is making for a hotbed of activity. 300 Million US active mobileThe US has a population approaching 310.6 million, and there aresubscriptionsa fraction over 300 million active mobile subscriptions in the US, ofwhich, almost one-third use their mobile phone to browse.$797.6 MillionmobileSQUARED research has highlighted that around 50% of theUS Mobile AdvertisingUS mobile internet users are doing so on a frequent basis on a market worthdaily or almost daily basis.The mobile internet is becoming a very popular and powerfulplatform throughout the US, and this is creating an opportunity forcontent producers and publishers to capitalize through the deliveryof creative and rich-media-based advertisements to consumers.Because of the countrys vast population, the average mobilecampaign spend is significantly larger than anything witnessedin Europe, for example. In the US, the average mobileadvertising campaign spend is between $75,000-100,000. Onaverage, creatives receive 10-15% of the budget which could total$15,000 and provide the scope to develop an ad delivering a richconsumer experience. In the UK for instance, the average creativebudget would be approximately $5,000 maximum.The richer advertising content is helping to fuel themobileadvertising marketplace even further. In 2010, the USmobileadvertising market is expected to be worth $797.6 million, secondonly to Japan which is the worlds only billion dollar mobileadvertising economy.US Mobile Ad Spend, 2010 20%29%3%Opt-in Messaging 2% Mobile Games/Music/Video/TVAppsSearchBanner Ads 46% Source: mobileSQUARED, October 2010 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising 4 5. For the US, this equates to a little under 8,000 mobile advertisingcampaigns, and an average of 21.8 new campaigns per day. But $5.04 Billionthe market has to brace itself for unprecedented growth. The USmarket will join Japan next year, when revenues are forecast to top US Mobile Advertising$1.24 billion, and increasing to $5.04 billion by 2015. revenues by 2015Total mobile banner spend (US$) of Europes Big Five Banner Ads Search Apps Mobile Games/Music/Video/TV Opt-in Messaging Source: mobileSQUARED, October 2010Yet mobile remains a fraction of total advertising spend in the US.According to ZenithOptimedia, part of the Publicis Groupe, the USis set for a 2.4% increase in advertising spend to $151.5 billion in2010 with global ad spend for 2010 expected to be worth $449.5billion. For the US advertising industry, mobile represents 1% oftotal spend.Aside from the phenomenal increase in mobile advertising activityduring the forecast period, as a medium, mobile is yet to penetrateover 50% of the US mobile population in terms of advertising. 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising 5 6. The consumers are coming: millions of themA nationally-representative survey of US mobile phone usersconducted by Lightspeed Research for mobileSQUARED, revealedthat one-sixth of US mobile users (49 million), have engaged with an 49 Millionadvertisement of some description on their mobile phone. Already engaged with an advertisementA breakdown of those users reveals that 12.3 million mobileusers have clicked on the advertisement and went on to purchasean item, 28.86 million users have clicked on the advertisement 12.3 Millionand looked at the item advertised but did not buy it, while a furtherUsers clicked on the ad7.82 million mobile users have clicked on the advertisement andand purchased an itemlooked at the item advertised on their mobile phone and ended upbuying it online using their PC/MAC.Not only does this highlight that an increasing number of mobile28.86 Millionusers are willing to commit to a purchase there and then over their Users clicked on the admobile phone than those opting to delay until in front of their PC,but did not bought itthe total number of mobile users engaging with mobile adverts inthe US is incredibly high. But it has to be said, that that figure willonly increase.The consumer survey revealed the now expected naysayers, with21.6% of users doubt they will ever click on an advertisementon their mobile, or 64.9 million mobile users. However, 53.1% ofespondents claimed to have never seen an advertisement on theirphone. This suggests a little over 50% of the US population is yetto form an opinion with regards to mobile advertising. Put anotherway, 159.63 million mobile users in the US are yet to experiencemobile advertising. Realistically, it is only a matter of time until theydo.Therefore, the number of mobile users in the US that will engagewith mobile advertising can only increase. Even if one-third of the159.63 million indulge in engagement, that will deliver an additional53 million mobile users, taking the total number beyond the 100million mobile user mark.US Mobile Populations Propensity to Mobile AdvertisingSource:mobileSQUARED, October 2010 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising 6 7. The American DreamFollowing years of promise, the US mobile advertising marketplacehas sprung into life, and will become the second billion dollar marketafter Japan during 2011. Yet the true potential of mobile, andthe market realisation of advertising on the medium, remainssome distance away. By the end of 2010, mobile advertising willrepresent 1% of total ad spend in the US. And although mobile isgrowing faster than online, that is only to be expected given digitalwas an entirely nascent medium 10 years ago, and has laid downthe foundations for mobile to florish. And florish the United Statesof mobile Advertising will.The State of Mobile AdvertisingAccording to the data collected by Smaato choosing theright ad network is a complicated decision, as publishersshould consider fill rates, operating systems as well asresponse times of ad networks, to name a few criteria.Smaatos metrics are published monthly to show the state of themobile advertising ecosystem according to data from over 50 adnetworks globally & inventory of 9,000 registered publishers.The metrics demonstrate theperformance of mobile adnetworks globally and thefill rate is measured as thepercentage of ads delivered perad request and varies by differ-ent factors like country, deviceand content type.Smaato Mobile AdvertisingMetrics are published monthlyat: http://metrics.smaato.comChart: Fill Rate of Mobile Ad Networks (USA), September 2010Nick Lane, Chief Analyst, mobileSQUAREDNick has been described as the leading commentator on UKmobile media (Adam Smith, Futures Director at GroupM). But Nicksexperience extends well beyond the UK. He specializes in mobilemarket intelligence and heads up the research and analysis atmobileSQUARED ( to launching mobileSQUARED, Nick was Head of ResearchServices and Principal Analyst at Informa, where he oversaw thegroups leading industry newsletters, reports and forecasts thathave helped shape the mobile industry.In this role, Nick established himself as one of the leadingauthorities on the mobile content, services and advertising space,regularly speaking and chairing at conferences and events aroundthe world. While in this role at Informa, Nick wrote a number of re-ports, from consumer behavioral analaysis to mobile advertising. 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising7 8. open mobile advertisingAbout SmaatoSmaato is a pioneering mobile advertising company that operates the mobile ad optimization platform calledSOMA (Smaato Open Mobile Advertising) and partners with mobile publishers, developers, ad networks andoperators.Smaatos SOMA mobile advertising platform aggregates more than 50 mobile ad networks worldwide andoptimizes mobile advertising revenues according to automated rules overseen by an experienced adoperations team. More than 9,000 publishers have signed up with Smaato as a partner to monetize theircontent in 220+ countries and Smaato is managing 16 billion ad requests per month.SOMAs unique feature is the aggregation of multiple leading ad networks globally to maximize mobileadvertising ARPU. SOMA can be easily integrated with ad networks, ad inventory owners (publishers, developersand operators) and 3rd party ad technology providers.Smaato is an active member of the Mobile Marketing Association and the German Digital Media AssociationBVDW. Smaato received a Top 100 Private Company Award by AlwaysOn Media (2009 & 2007) and was recentlynamed a company to watch 2010 by Financial Analyst company GP Bullhound, among other awards.Smaato Inc. is based in Redwood Shores, California. The privately held company was founded in 2005 by anexperienced International management team. The European headquarters are in Hamburg, Germany and theAsia-Pacific presence of Smaato has been established in Singapore.Redwood Shores, CAHamburg, Germany Singapore, SGT: +1 (650) 286 11 98 T: +49 (40) 3480 White Papers names of actual companies and products mentioned here may be trademarks of their respective owners.